We’ve all been there. You’ve packed up the car to go on a long journey for which there are always two things we do…check there is enough fuel in the tank to get us there, and as Alice in Wonderland would have us all know, we need know where we are going. In this day and age we would simply plug in a post code into the Satnav and that journey plan will ebb and flow to our destination. This is rather like a financial plan.
Hang on a minute I hear you say, TWP are financial planners. What has this go to do with financial planning? Well that is very simply that financial planning can be looked at like a long car journey, as ultimately clients have their goals/objectives – in other words they know where they are going, and in order to get there or achieve these they need to ensure the plan is on track – is there enough fuel in the plan!
Where you are going, the destinations you want to get to are dreams/hopes/goals, and invariably money is needed to achieve these. Whether this is to retire early and spend more time travelling, or funding children’s education, these will be specific to each individual, but importantly these need to be planned for, as without doing this, how do you know if you will achieve these dreams? Indeed without a plan you may well just keep on driving by these dreams.
The importance of putting a financial plan in place cannot be overstated. After all do you want to get to retirement, as an example, and find out that you do not have enough fuel to get you through retirement?
Financial planning does normally come hand-in-hand with an investment strategy, but it’s important to remember that without first having your financial plan in place, how can an investment strategy can be put in place? It is important to remember that the purposes of a financial plan is not to generate x returns or outperform the FTSE100 for example, the plan is there to look at where you are going and how we get you there. It’s the fuel you need to power your plan. The right investment strategy is the right one for you, it doesn’t matter what everyone else is doing, and the only thing that matters is your dreams/hopes/goals, and the strategy in place to achieve these.
We have all been there on the motorway stuck in traffic, when you see an individual start to weave in and out of traffic to get ahead, with the end result being they don’t really achieve anything. They are speculating that this strategy with work for them – it normally never does. By staying in lane and sticking to your plan those dreams/hopes/goals can be achieved.
Will there be bumps along the road/diversions to your plan? The likelihood is there probably will be. However, by having a financial plan in place at the outset you will ensure that any delays or diversions to your plan can be dealt with. You don’t set off on a car journey without having car insurance or breakdown cover in place, so equally on your financial plan you need to ensure that you have in place the correct life and critical illness/disability cover for example.
Our role here at TWP is to ensure that before you start your journey, we know where you are going and what you have in the tank. We can then look at the map and plan how best to get there – the financial plan, and ensure the right provisions are in place to get you there – the investment strategy. Repeating this process on a regular basis will ensure any delays and diversions to the plan can be dealt, and a new route taken if necessary.